Ethiopia has signed an agreement to build two geothermal power plants at a combined cost of $4-billion, to be run by the country’s first privately owned utility.
The Corbetti and Tulu Moye plants will produce a combined 1 000 MW of power on completion in eight years’ time in the volcanically active Rift Valley south of the capital Addis Ababa.
Ethiopia is eager to meet rising energy demand from its industries as well as become the continent’s biggest exporter of energy.
“No doubt, the success of this effort will have a significant impact on the country’s future economic wellbeing,” said State-run Ethiopian Electric Power CEO Azeb Asnake.
The project’s equity investors include Paris-based asset manager Meridiam, as well as the Africa Renewable Energy Fund and InfraCo Africa – funds that focus on infrastructure.
As Ethiopia’s first privately owned utility, the project will be operated by the developers for a period of 25 years.
In an economy traditionally dominated by State spending, the government has suggested that the nascent sector could be a model for increased private investment.
“Going forward, government recognises the added value to be gained by working in partnership with the private sector, specifically in sharing with it the burden of investment for large-scale power generation,” said Water, Irrigation and Electricity Minister Seleshi Bekele.
Under a new 2015 to 2020 development plan, Addis Ababa wants to raise power generation to 17 346 MW from a current capacity of just over 4 300 MW from hydropower, wind and geothermal sources.
It has an array of projects under construction, including the $4.1-billion Grand Renaissance Dam along its shore of the Nile river that will churn out 6 000 MW at full capacity on completion within the next ten years.